Mergers...Is Continental Kidding?
 

Just a musing here between patients...

I was interested a year ago when Delta fended off the "hostile" takeover attempt by USAirways with a lot of public talk about wanting to remain a stand-alone carrier and the "problem" with integrating a "mixed fleet" of aircraft made by various manufacturers.

Fast forward to a couple of weeks ago and Delta is now telling anybody who is influential and can be persuaded, about how wonderfully advantageous this "mixed fleet" of aircraft will be (given all those Airbus-made units at Northwest) and more blah blah blah.

In today's "Washington Post" Lawrence Kellner, the CEO at Continental is quoted talking about the "significant cultural, operational and financial strengths compared to the rest of the industry..." and how those things would be "placed at risk in a merger with another carrier..."

Cultural strengths??? And reported to have been discussing merger possibilities with American?

Any bets on how long it will take?

Regardless of whether there are "cultural etc" differences or not, reading between the lines you can almost suspect that a merger with UA doesn't look so good this week since UA lost about 1/3 of its market value after announcing its 1st Q financials. (NOTE: that's this week; who knows about next)

CO is more likely to quit SkyTeam and look possibily at an alliance (like AF/KL) rather than a merger - at least for now. The speculation this morning is with AA.

IMO none of these mergers is going to work unless they drastically reduce costs, restructure, and become more efficient. Combining 2 sick patients, without more, usually doesn't cure the patient.

Why they are kidding.

Have you followed the labor relationship and the various issues at UAL lately?

And the DL/NW link up hasn't impressed Wall Street either. Apparently, they don't buy that it will save money, as their stock prices have gone down, not up, since their announcement. Both reported large losses - operating losses, not just the 10 billion of goodwill write down.

And they are <b>not</b> talking with AA about a merger. They are talking about alliance switch for CO from DL/NW/Skyteam to AA/BA/oneworld.

Hey, I'm on YOUR side, OK?????

Although I think there is a lot of &quot;public&quot; talk about what companies are and are not doing so I'll leave the specualtion about just what might be being said in these &quot;non-talks/negotiations&quot; to those of you with the inside info tracks.

DFR848,

I would agree that you have to wonder about the business sense of some of these decisions and I suspect there are probably many issues that come with restructuring, cost-cutting, labor issues, etc., etc., etc.

As you indicated, wait 'til next week and as far as Wall Street being some sort of financial seer..yeah, right...they really saw the current mortgage thing coming, didn't they...or did they see it and forget to tell anybody else?

I think they &quot;forgot&quot; to tell anyone else!!

Got an email yesterday which I have only now read from a friend who works for CO...no deal, Howie.BUT, wait, what did I just read......&quot;Reports Say United, US Airways in Talks&quot;.........Didn't they already talk???

&lt; didn't they already talk &gt;

Yes, but they're talking again. IMO a UA/US merger could be a receipe for real problems. Among other things, US still hasn't worked out the pilot issues from its merger with America West. This might not be pretty.

FWIW - more reports this morning about CO quitting Skyteam and forming an alliance (not merger) with AA.

UA and US are made for each other. Last time, the government stopped them, but I think this time it will happen.

UA will marry anybody who will take it.

US' own troubled didn't stop them from trying to buy DL while DL was still in bankruptcy. Doug Parker sure has a huge ego, but he also knows that US' alone is as dead as a door nail.

ray - I don't disagree with your comments. I just think there are going to be so many economic and personnel issues that &quot;it ain't going to be a pretty picture&quot; and may present more problems than it solves. Having been involved in some airline restructurings in the past, I wouldn't relish being part of this one.

Oh, that would be the ugliest airline merger ever, I'm pretty sure. What I mean is that it has a good chance of happening because of the circumstances with those two carriers.

One of the major strengths CO has going for it is relatively positive labor relations. It is not just spin, either - CO has put its money where its mouth is in terms of employee performance pay/profit sharing. One of the reasons I choose CO even when there may be a slightly more convenient schedule on another carrier is that I consistently get better service from CO employees.